Honeywell 2007 Annual Report Download - page 42

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2008 Areas of Focus
ACS's primary areas of focus for 2008 include:
• Extending technology leadership: lowest total installed cost and integrated product solutions;
•
Defending and extending our installed base through customer productivity and globalization;
•
Sustaining strong brand recognition through our brand and channel management;
•
Centralization and standardization of global software development capabilities;
•
Acquisition execution and integration; and
•
Continuing to establish emerging markets presence and capability.
Specialty Materials
Overview
Specialty Materials develops and manufactures high-purity, high-quality and high-performance chemicals
and materials for applications in the automotive, healthcare, agricultural, packaging, carpet fibers, refrigeration,
appliance, housing, semiconductor, wax and adhesives segments. Specialty Materials also provides process
technology, products and services for the petroleum refining, petrochemical and other industries. Specialty
Materials' product portfolio includes fluorocarbons, caprolactam, ammonium sulfate for fertilizer, specialty films,
advanced fibers, customized research chemicals and intermediates, electronic materials and chemicals,
catalysts, and adsorbents.
Economic and Other Factors
Specialty Materials operating results are principally driven by:
• Level of investment in refining and petrochemical capacity, utilization and/or expansion,
•
Degree of pricing volatility in raw materials such as benzene (the key component in phenol), natural gas,
ethylene and sulfur;
•
Impact of environmental and energy efficiency regulations;
•
Extent of change in order rates from global semiconductor customers;
•
Global demand for non-ozone depleting Hydro fluorocarbons (HFC's); and
•
Condition of the US residential housing industry.
Results of Operations
2007 2006 2005
(Dollars in millions)
Net sales $ 4,866 $ 4,631 $ 3,234
% change compared with prior year 5% 43%
Segment profit $ 658 $ 568 $ 257
% change compared with prior year 16% 121%
Specialty Materials sales increased by 5 percent in 2007 compared to 2006 driven by (i) a 16 percent
increase in UOP sales primarily as a result of higher volume in its projects business principally due to capacity
expansion in the refining and petrochemical industries and (ii) a 4 percent increase in Specialty Products sales
due in large part to increased sales of electronic chemicals and specialty additives and higher sales to customers
in the health care industry. Partially offsetting these increases was a 6 percent decrease in Fluorine Products
sales primarily due to lower refrigerant pricing and lower sales volume of foam blowing agents used in insulating
material as a result of continued weakness in the U.S. housing market.
Specialty Materials sales increased by 43 percent in 2006 compared to 2005 due to organic sales growth of
7 percent and 36 percent growth due to our UOP acquisition, net of divestitures.
28